Insight and Commentary on Business Legal Issues

Wal-Mart Prevails in Huge Discrimination Lawsuit

In a much-awaited decision, the U.S. Supreme Court has thrown out a huge discrimination lawsuit against Wal-Mart that had been filed as a class action by female workers.

The U.S. Supreme Court ruled that a massive lawsuit filed on behalf of 1.5 million female workers against Wal-Mart that alleged the retail giant had systematically discriminated against them in pay and promotions could not go forward as a class-action, and the decision could have far-reaching effects in employment cases.

The Court, in a closely divided 5-4 vote, held that the plaintiffs could not show that Wal-Mart had a common policy of discriminating against women. Instead, because the company allowed individual store managers to decide on pay levels and promotions, the plaintiffs could pursue individual claims if they believed they were discriminated against, but Wal-Mart could not be forced to defend against a class action.

The ruling is a huge victory for Wal-Mart, which spent millions of dollars defending the case, and it may also protect other large employers from similar claims that rely on statistics (rather than hard evidence) that may suggest discrimination based on the race or gender of employees. Had the plaintiffs’ lawyers prevailed against Wal-Mart, other large employers who allegedly relegate women or minorities to lower-paying jobs were seen as likely targets of similar class actions.

While the Court’s majority found it “quite unbelievable” that Wal-Mart managers would exercise their discretion re: pay and promotions in a common way without some common direction, dissenting Justices felt there was enough evidence of systematic sex discrimination by Wal-Mart to allow the suit to go forward. “Women fill 70% of the hourly jobs in the retailer’s stores, but make up only 33% of the management employees,” Justice Ruth Bader Ginsburg wrote. “The higher one looks in the organization, the lower the percentage of women.”